FIRST was launched in 2002 by the Canadian International Development Agency (CIDA), the Department for International Development for the United Kingdom (DFID), the International Monetary Fund (IMF), the Ministry of Foreign Affairs of The Netherlands, the State Secretariat for Economic Affairs of Switzerland (SECO), the Swedish International Development Cooperation Agency (SIDA), and the World Bank.

The World Bank manages the FIRST Initiative on behalf of the donors. FIRST has been recently extended to 2012 with funding of $100 million in total, based on its success in the first four years of its operations.

FIRST's mission is to support growth and poverty reduction in low- and middle-income countries through the promotion of robust and diverse financial sectors.

FIRST's specific objectives are to:

i) Fund technical assistance in the areas of financial sector regulation, supervision and development in response to country demands, provide support to countries to strengthen their financial systems or implement standards and codes in advance of Financial Sector Assessment Programs (FSAPs) or Reports on Standards and Codes (ROSCs), and facilitate systematic follow-up of related recommendations.

ii) Assist recipients in preparing prioritized action plans addressing financial sector development and the sequencing of reforms (for example as a follow-up to FSAPs), and advise clients, especially in low income countries, on the implementation of financial sector development programs.

iv) Support research on and the dissemination of best practices and useful tools related to financial sector reform and development in low- and middle-income countries.

v) Work with international standard-setting bodies and other relevant partners to broaden the base of providers supporting countries' efforts to implement standards and codes in accordance with FSAP and ROSC recommendations and strengthen their financial systems.

FIRST's focus is short-term and medium-term projects. Technical assistance projects range in size from a few thousand dollars up to US$500,000 and, exceptionally, more. The majority of projects supported to date have been between US$100,000 and US$200,000.

Project Characteristics

FIRST gives preference to projects with the following characteristics:

i)Likelihood of achieving the stated project objectives; of practical, tangible results; of successful implementation; of measurable impact and of replicability elsewhere.

ii)Well-defined proposals of high quality, with realistic expectations.

iii)Showing strong elements of additionality, rather than substitution.

iv)Catalytic, likely to lead to follow-up TA work; leveraging other resources, now or later.

v)Short - to medium-term nature (6-18 months).

vi)Cash or initial contributions of 10 percent from recipients.

vii)No "core funding" (sole or primary source of funding of a start-up or an up- and running organization).

viii)Projects those are "demand-driven" by entities from countries, regions, multilateral development banks and industry associations; rather than "supply-driven" by industrialized country consultants, Bank staff and the like.

FIRST Initiative - Funding Application Criteria

FIRST selects projects in accordance with the following broad guidelines:

Tangible links to systemic stability and market development

Proposals need to demonstrate clear links between proposed technical assistance and systemic stability and market developments that promote economic growth, and the reduction of poverty and income inequality.

Outcomes orientation

Proposals need to include outcome indicators against which the contribution of the project to systemic stability and market development can be assessed:

Soundness and stability outcomes.

FIRST funds projects that result in, or are reasonably likely to lead to, soundness and stability outcomes. Soundness and stability outcomes are those that reduce systemic risks (e.g., by resolving problem financial institutions), and/or that enable or improve the capacity of market participants to manage risks. Soundness and stability outcomes could include, therefore, putting in place market infrastructure, institutional capacity, and/or legal, regulatory and supervisory arrangements. FIRST continues to give priority to funding projects involving post-FSAP/ROSC follow-up.

Market development outcomes.

FIRST places increased emphasis on market development outcomes. Achieving market development outcomes can be characterized as pursuing financial sector access, or financial inclusion. Increasingly, economic research suggests that supporting financial sector reforms that promote inclusiveness should be at the core of the overall development agenda. Market development involves developing and launching new financial products/services, enhancing existing products/services, and/or reaching new client groups and geographic markets with existing or enhanced products/services.

Commitment to implementation.

Proposals that lead to implementation on change in markets. This can include assistance in the form of support to development of action plans. This will include funding for assisted self-assessments of financial sector standards and codes that are expected to lead to formulation of such action plans. FSAP findings and recommendations also may represent a significant input to such prioritized action plans. It may include funding for workshops deemed necessary to raise stakeholder awareness of key issues so as to facilitate action plan implementation. It is anticipated that formulation of prioritized action plans will identify separate projects supporting action plan implementation, some of which will be funded by FIRST.

Efficiency.

Proposals for activities which adopt the lowest cost strategies consistent with appropriate standards of quality.

Leverage and additionality

Proposals that ensure that FIRST funds activities that are complementary to activities that are being funded from other sources and that FIRST's funding of activities does not substitute for or displace funds available from other sources, such as loans or grants from other private or public programs, including ongoing programs of the FIRST Donors. Proposals that have the potential to leverage funds for the implementation of technical assistance from other sources, including other donors and Bank budget.

Relevance

Proposals that ensure that the proposed activities are consistent with the proposed recipient's plans for preparing for financial sector reform and conducting or following up on FSAPs or ROSCs, as the case may be.

Country Concentration.

No country will receive more than 10 percent of the total resources that have been committed by donors.

Specific Criteria

Eligible applicants to qualify for FIRST Trust Fund support, project proposals must be submitted directly to FIRST by eligible applicants.

Eligible applicants are policy makers, regulatory bodies, government agencies, quasi-public institutions under limited circumstances (such as self-regulatory organizations and industry associations), or the Bank or IMF in cases where there is no specific implementing entity (such as for regional or global projects). Applicants may be assisted by Bank, IMF, and other official multilateral and bilateral agency staff in preparing project proposals.

Beneficiaries of all FIRST assistance must be countries eligible for IBRD loans or IDA credits.

Types of activities.

Types of activities to be funded include primarily funding of consultants; provision of medium-term advisers/mentors, training in or outside of country; secondment of experts; study tours (only very exceptionally); workshops, seminars (always linked to FIRST-funded projects and part of demonstrable reform activities). General thematic conferences are only funded if they involve very specific follow-up action. FIRST does not fund hardware/software or academic research.